The hur­dles fac­ing the Pe­tro­leum In­sti­tute

By: MUSA MU­GOYA

When Ugan­dans re­ceived the news of oil min­eral re­source dis­cov­ery in the coun­try, a lot of ex­pec­ta­tions crossed to their minds. These ranged from pos­i­tive to neg­a­tive ex­pec­ta­tions but with the con­tin­ued as­sur­ance from the gov­ern­ment of­fi­cials on the proper man­age­ment of the re­source, the pos­i­tive ex­pec­ta­tions have al­ways taken the lead. Ugan­dans ex­pects that the with oil dis­cov­ery and its ex­plo­ration and pro­duc­tion, jobs will be cre­ated.

They also hope that the rev­enue which will be gen­er­ated from the re­source be used to es­tab­lish good in­fra­struc­tures like roads, rail­ways and so­cial ameni­ties like clean and safe drink­ing wa­ter, hos­pi­tals and schools men­tion but a few. Ac­cord­ing to the Tul­low Oil- Uganda re­port of 2013, it is ex­pected that about 150,000 job op­por­tu­ni­ties are to be cre­ated in the Oil and Gas Sec­tor. With the po­ten­tial ar­eas of op­por­tu­nity in­clud­ing: trans­port, hos­pi­tal­ity, com­mu­ni­ca­tions, bank­ing, cater­ing, waste man­age­ment, IT ser­vices, con­struc­tion, train­ing, emer­gence ser­vices, ad­ver­tis­ing and pub­lic re­la­tions.

For the above to be re­al­ized, Gov­ern­ment has to es­tab­lish a fa­vor­able en­vi­ron­ment to pre­pare its cit­i­zens for those po­ten­tial op­por­tu­ni­ties. This can be done by es­tab­lish­ing ed­u­ca­tion in­sti­tu­tions that can train cit­i­zens in the rel­e­vant fields re­quired in the sec­tor in or­der to in­crease pro­duc­tiv­ity and in­come ac­tiv­i­ties in the econ­omy. Since gov­ern­ment could not find monies, out of the col­lected rev­enue to es­tab­lish in­fra­struc­tures that could fa­cil­i­tate the de­vel­op­ment of the oil sec­tor. It had to seek fund­ing from fi­nan­cial lend­ing in­sti­tu­tions. Hence the gov­ern­men­t’s pro­posal to bor­row up to US $ 145m from the In­ter­na­tional De­vel­op­ment As­so­ci­a­tion of the World Bank to fi­nance the Al­ber­tine Re­gion Sus­tain­able De­vel­op­ment Pro­ject.

The pro­ject is com­posed of three com­po­nents, that is Re­gional Ac­cess and Con­nec­tiv­ity which is to cost US$ 95m; Lo­cal Ac­cess, Plan­ning and De­vel­op­ment to be funded to a tune of US$ 25m; and Skills Ac­cess and Up­grad­ing with a cost of US$25m- which is the main point of dis­cus­sion.

The com­po­nent is de­signed to up­grade the Busi­ness, Tech­ni­cal, Vo­ca­tional Ed­u­ca­tion Train­ing (BTVET) qual­ity in the oil and gas sec­tor. It will sup­port the gov­ern­ment pro­gram of Skilling Uganda Strat­egy by fund­ing the up­grad­ing of the Uganda Pe­tro­leum In­sti­tute in Kigumba (UPIK) -which will fo­cus on train­ing spe­cial­ized tech­ni­cians for the pe­tro­leum in­dus­try in pe­tro­leum op­er­a­tions, me­chan­i­cal main­te­nance, elec­tri­cal main­te­nance and in­stru­men­ta­tion; Uganda Tech­ni­cal Col­lege(UTC)-Kich­wamba and also a new in­sti­tute will be es­tab­lished in Nwoya Dis­trict.

This loan re­quest stalled in Par­lia­ment for about a year. The Par­lia­men­tary Com­mit­tee on Na­tional Econ­omy which is re­spon­si­ble for scru­ti­niz­ing loan re­quests from the gov­ern­ment at­trib­uted its de­lay to ap­prove the loan on the fail­ure by the Min­is­ter of Ed­u­ca­tion to ap­point a Gov­ern­ing Coun­cil and Prin­ci­pal of UPIK. The com­mit­tee mem­bers who vis­ited the In­sti­tute de­scribed it as “a white ele­phant”.

In his own words the chair­per­son of the com­mit­tee Xavier Ky­ooma, Ibanda County North Mem­ber of Par­lia­ment while host­ing the Min­is­ter for Ed­u­ca­tion Jesca Alupo on the mat­ter, he said: “This loan has been be­fore the com­mit­tee for about a year. The Pres­i­dent has on sev­eral oc­ca­sions when­ever he vis­its the Al­ber­tine re­gion blamed Par­lia­ment for not ap­prov­ing the loan yet the prob­lem lies with the Min­istry of Ed­u­ca­tion which failed to re­solve the gov­ern­ing is­sues at UPIK”.

How­ever, the Min­is­ter for Ed­u­ca­tion ex­plained that there is no vac­uum in the man­age­ment of the In­sti­tute be­cause she ex­tended the con­tract of the Task force which was in charge of the man­age­ment of the In­sti­tute as well as lay­ing the Statu­tory In­stru­ment be­fore Par­lia­ment that es­tab­lishes the In­sti­tute. she also in­formed the Com­mit­tee that she met with World Bank Of­fi­cials and re­quested them to ap­prove the loan as the min­istry in­sti­tutes the Coun­cil.

We need to re­mind the Min­is­ter that im­me­di­ately the loan is ap­proved, it will be­come ef­fec­tive and the coun­try will start to in­cur costs in terms of in­ter­ests. For this par­tic­u­lar loan, the ser­vice charge was 0.75% per an­num on the dis­bursed and out­stand­ing bal­ance of credit . There was also a  com­mit­ment fee at 0-0.5% per an­num on out­stand­ing bal­ance of un-dis­bursed credit though the re­pay­ment pe­riod is 30 years in­clud­ing 10 years of grace. The Com­mit­tee re­ported back to the House rec­om­mend­ing that Par­lia­ment ap­proves the loan re­quest with the ex­cep­tion of the funds for UPIK. The Loan re­quest was fi­nally ap­proved on 22nd July 2015.

We leave the blame games aside and turn to the loss made to Ugan­dans as a re­sult of the de­lay by gov­ern­ment to mo­bi­lize re­sources for this cru­cial ac­tiv­ity. In the first place gov­ern­ment is ca­pa­ble of rais­ing this money which was re­quired to en­sure func­tion­al­ity of this In­sti­tute with­out nec­es­sary go­ing for bor­row­ing. It is just a mat­ter of un­der­stand­ing our pri­or­i­ties.

With on­go­ing oil re­lated ex­plo­ration ac­tiv­i­ties, it means that the oil and gas sec­tor is dom­i­nated by for­eign­ers at the ex­pense of a big num­ber of un­em­ployed youths just be­cause of the ab­sence of a func­tion­ing in­sti­tu­tion which would have equipped Ugan­dans with the re­quired skills. This may also re­sult to fu­ture de­pen­dency on for­eign­ers in the sec­tor be­cause Ugan­dans have not been pre­pared

In prepa­ra­tion for other fu­ture pro­jects of this na­ture, par­lia­ment should ap­pro­pri­ate re­sources for these ac­tiv­i­ties in time such that masses can be pre­pared in ad­vance. Sec­ondly, it should also im­prove on its over­sight and ac­count­abil­ity mech­a­nisms such that such gov­ern­ment of­fi­cials whose in­ef­fi­ciency costs the masses to that tune are held ac­count­able and brought to book.